Restructuration of the Group and establishment of subsidiaries

With the aim of reorganising the structure of the companies of Tallinna Kaubamaja Grupp, splitting up retail sale and wholesale of beauty products and footwear into separate companies, and developing financial services that support retail trade, the Group’s subsidiaries will be restructured and three new subsidiaries will be established as set out below.

Merger of Selver AS and ABC Supermarkets AS

In order to harmonise the management function and increase synergies, a plan has been put in place to integrate the activity of the Group’s supermarkets through a merger whereby ABC Supermarkets AS (the company being acquired), which fully belongs to Selver AS (the acquiring company), will be acquired by the latter. Selver AS, a subsidiary of Tallinna Kaubamaja Grupp AS, is a chain of supermarkets and hypermarkets operating in Estonia that primarily sells food and staple goods. The Selver chain, which has been operating since 1995, consists of 54 stores, of which 22 are located in different districts of Tallinn, and an e-store with the largest servicing area in Estonia. As a result of the purchase of shares of ABC Supermarkets AS on 29 May 2020, the chain acquired sixteen Comarket stores in Harju County, Pärnu County, and Tartu County, two Delice food stores in Viimsi and Pärnu, and the Solaris Food Store.

After the merger has been entered into the commercial register, the sixteen Comarket stores will be gradually brought under the Selver trademark by the end of 2020. The Solaris Food Store will continue to operate under the Solaris Food Store trademark and the two stores in Viimsi and Pärnu doing business under the Delice trademark will retain the Delice trademark.

Kristi Lomp, current member of the management board, will continue as a member of the management board of Selver AS. Andrus Põld, a current member of the management board of ABC Supermarkets AS, will become the manager of Selver’s small formats. The supervisory board will continue with members Andres Järving (Chairman), Jüri Käo, Enn Kunila, and Raul Puusepp.

Separating retail sale and wholesale of cosmetics

The strategic objective of the Group is the continued development of the wholesale function along with retail trade and the expansion of the selection of imported trademarks. The main field of activity of OÜ TKM Beauty, a subsidiary which is solely owned by Tallinna Kaubamaja Grupp AS, is the retail sale and wholesale of cosmetics products in two L’Occitane stores. OÜ TKM Beauty has a subsidiary, OÜ TKM Beauty Eesti, which is involved in the retail trade of cosmetics products in Estonia and manages the I.L.U. store chain of beauty products. Currently, three stores operate in Tallinn (Rocca al Mare, Ülemiste, Kristiine), one in Tartu (Lõunakeskus), and one in Pärnu (Pärnu Keskus).

In order to separate the operations of OÜ TKM Beauty Eesti, which is involved in the retail trade of cosmetics, from the cosmetics wholesale function, a division will be undertaken. In the course of the division of OÜ TKM Beauty (company being divided), OÜ TKM Beauty Holding, a company with a share capital of 2,500 euros and 100% ownership by Tallinna Kaubamaja Grupp AS, will be established. OÜ TKM Beauty will transfer the share of OÜ TKM Beauty Eesti to OÜ TKM Beauty Holding (recipient company). Anne-Liis Ostov, who currently manages the operations of I.L.U., will become a member of the management board of OÜ TKM Beauty Holding. The further plan is to merge OÜ TKM Beauty Holding and OÜ TKM Beauty Eesti so that OÜ TKM Beauty Eesti will directly become a 100% subsidiary of Tallinna Kaubamaja Grupp AS. Anne-Liis Ostov does not hold any shares of Tallinna Kaubamaja Grupp AS.

Separating footwear retail sale and wholesale

Another division of subsidiaries will take place in the Group with the aim of separating retail sale and wholesale functions of footwear, wherein TKM King AS (company being divided) will transfer part of its assets to TKM Hulgikaubandus OÜ (recipient company), a company to be established in the course of the division. The objective of the activity of TKM Hulgikaubandus OÜ is the import of footwear and other industrial goods for the retail companies of Tallinna Kaubamaja Grupp. Tallinna Kaubamaja Grupp AS will be the sole shareholder of TKM Hulgikaubandus OÜ and the share capital of the new company is 2,500 euros. Kristi Lomp, who will continue as a member of the management board of Selver AS as well, will be a member of the management board of TKM Hulgikaubandus OÜ and she does not hold any shares of Tallinna Kaubamaja Grupp AS.

Establishment of subsidiary TKM Finants AS

We aim to provide our customers more convenient purchases and have therefore decided to develop financial services that support our retail business. Tallinna Kaubamaja Grupp AS is applying for an authorisation of a creditor to develop the financial service line of business and is establishing TKM Finants AS, a subsidiary with a share capital of 50,000 euros belonging completely to the Group. According to the developed plan, after the Financial Supervision Authority has issued the relevant authorisation, TKM Finants AS will commence with granting credit to private persons, the postponement of a due date for a charge, including the entry into credit agreements and performance of acts needed for this purpose in its own name and on its own account. Member of the management board of TKM Finants AS will be Marit Vooremäe, who has been working as the financial director of Tallinna Kaubamaja Grupp AS since 2008 and who will continue in this position after the establishment of TKM Finants AS. Marit Vooremäe does not hold any shares of Tallinna Kaubamaja Grupp AS.

The establishment of subsidiaries and reorganisation of the Group’s structure will have no effect on the consolidated financial results of the Group. Establishment of subsidiaries is not deemed to be qualifying acquisition of a holding for the purposes of the part ‘Requirements for issuers’ of the Rules and Regulations of the NASDAQ OMX Tallinn Stock Exchange and it will not significantly impact the activity of the Tallinna Kaubamaja Grupp AS. The members of the management board and the supervisory board of Tallinna Kaubamaja Grupp AS have no other personal interests in these transactions.

Raul Puusepp 

Chairman of the Management Board

Tel 731 5000